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Rj reynolds-idea-failure

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Rj reynolds-idea-failure

  1. 1. RJ Reynolds’ smokeless cigarettes The ultimate bad ideaCigarette manufacturers have often thought that the best way to build market share is to come upwith new twists on the standard cigarette formula. For instance, Marlboro has had dozens of differentvarieties in its history, including Marlboro Menthol, Marlboro Lights and Marlboro Medium.Normally, cigarettes produce new varieties based on different levels of tar. For instance, in the UKthe Silk Cut brand produced various low-tar varieties – Mild, Low and Ultra Low. The popularitiesof such low-tar brands has caused cigarette companies to think of ever more ways to try and convinceconsumers that their unhealthy and anti-social products aren’t as unhealthy or as anti-social as theymight have thought. Similar strategies have been deployed in the beer market, with brands such asBud Light, Coors Light and Miller Lite.However, some of these strategies take an extreme form. Forinstance, in the alcohol market there was the case of the beer brand which tried to sell beer-brandedmineral water. The brand was Coors. The water it produced was called Coors Rocky MountainSpring Water. It was launched in 1990 and survived only two years.In the cigarette industry, the extreme strategy belonged to RJ Reynolds Tobacco Company known forbrands such as Camel, Winston, Salem and Doral. In 1988, when the anti-smoking lobbyists couldfinally claim the majority of public opinion was behind them, and when passive smoking had beenofficially recognized as a serious danger to health, the company decided to conduct trials on asmokeless cigarette. In total, RJ Reynolds spent US $325 million on creating a smokeless cigarettewhich it branded as ‘Premier’. However, problems became apparent straightaway. First, there wasthe taste issue. One person who ‘smoked’ Premier complained that it ‘tasted like shit’. And he wasRJ Reynolds’ chief executive.Then there was the difficulty of using the product in the first place, as Reporter Magazine( explains: ‘Inhaling the Premier required vacuum-powered lungs, lighting itvirtually required a blowtorch, and, if successfully lit with a match, the sulphur reaction produced asmell and a flavour that left users retching.’ In addition, there was the damaging rumour that thesmokeless cigarette could be used as a delivery device for crack cocaine. Hardly the kind of brandassociation RJ Reynolds had wanted to create. One of the major forms of controversy was thebrand’s possible appeal among younger people. Here is an extract from a statement by many leadingUS health organizations shortly after RJ Reynolds announced the new project: The American CancerSociety, American Heart Association, and American Lung Association have filed a petition with theUS Food and Drug Administration (FDA), asking that Premier be regulated as a drug. In filing thispetition, we are not calling for an outright ban on Premier. We want simply for it to be properlytested before people use it.We are especially concerned that Premier’s intriguing high-tech design will lure children andteenagers into the web of nicotine addiction. RJR’s marketing emphasis on ‘clean enjoyment’ alsomay lull people who already smoke into a deceptive sense of safety when they really ought to give upthe habit altogether. According to the FDA, any product marketed that claims that it is healthier orsafer, must be regulated by the FDA. Conventional cigarettes escape FDA scrutiny because they arepromoted for the sheer pleasure of smoking and because the FDA does not consider them tobe drugs or food.
  2. 2. In introducing Premier, RJR is stepping beyond that loophole. The RJR claim that Premier is‘cleaner’ is a poorly disguised way to imply ‘safer’ to thousands of people concerned about thehealth risks of smoking. RJR knows that if their ads said ‘safer’ in place of ‘cleaner’ the FDA wouldstep in. In the meantime, RJR promises that Premier is an improvement over conventional cigarettesthat burn with foul-smelling smoke. But, we are sceptical. How can we trust the same industry thatstill refuses to admit that cigarette smoking is harmful?The real problem though was that smokers didn’t enjoy using the smoke-free product, and non-smokers didn’t have a reason to. In short, there was no market. After four months of very slow sales,RJ Reynolds cut their losses and Premier was withdrawn. But the story doesn’t end there.By the mid-1990s, concerns about passive smoking led the company to believe there was still amarket for smokeless cigarettes. In 1996 it therefore spent a further US $125 million on developingan updated version, this time called Eclipse. In a press statement, a company spokesman announcedthe potential appeal of the brand. ‘I think we can all agree that for many non-smokers and for manysmokers, second-hand smoke is an annoyance, and to be able to reduce and almost eliminate thatannoyance is a very positive step in the right direction.’The new cigarette made less smoke than standard cigarettes because it didn’t burn. Instead charcoalwas used to heat the tobacco. The user drew heated air over the tobacco to release a tobacco andnicotine vapour. As a result, the Eclipse cigarette caused only 10 per cent of the normal level ofcigarette smoke, and promised lower levels of tar and nicotine. However, whether the cigaretteactually lowered the health risk of smoking – either for deliberate or passive inhalers – remainsquestionable. Sorrell Schwartz, a pharmacologist from Georgetown University who researched thetobacco industry, believed the cigarettes could be good news. ‘If it is as smokefree as it’s claimed tobe, then clearly the individual’s risk of lung cancer, emphysema, bronchitis would be reduced,’Schwartz told CNN. But Schwartz’s Georgetown colleague, Dr Naiyer Rizvi, was more sceptical.‘There are risks that may be related to increasing carbon monoxide in this cigarette and heartdisease,’ he told the CNN reporters.An independent study commissioned by the Massachusetts Department of Public Health found thatwhen it was compared to ultra-low tar cigarettes, the Eclipse cigarette had higher levels of severaltoxins, especially when the charcoal tip burned very hot from heavy smoking. This information wasclearly damaging to the Eclipse brand, because from the start the marketing activity was designed toaccentuate the health angle. Indeed, the original campaign was to include this pitch. ‘The best choicefor smokers who worry about their health is to quit. But Eclipse is the next best choice for those whohave decided to continue smoking.’ This marketing message provoked opposition from many leadingUS health organizations. The American Lung Association issued a statement saying, ‘we fear thatRJR’s health claims that this device is “safe” or “safer than cigarettes” may discourage smokers fromquitting.’ The Campaign for Tobacco-Free Kids joined the attack, with the organization’s president,Matthew L Myers releasing the following statement: ‘RJR’s announcement that it plans to market asafer Eclipse cigarette is taking advantage of the regulation gap created by the US Supreme Court’sdecision to remove FDA authority to regulate tobacco. Without FDA oversight, there is no scientificcorroboration of these claims by an independent government agency.’Particularly controversial was the fact that many of the medical experts who had suggested that thesecigarettes were less dangerous than standard brands had been doing research paid for by the tobaccocompany itself. Furthermore, independent medical analysts soon discovered that Eclipse cigarettespresented one health risk which was actually worse than standard cigarettes – glass fibres. John
  3. 3. Pauly, from the Department of Molecular Immunology at the Roswell Park Cancer Institute inBuffalo, New York, discovered that 99 out of every 100 Eclipse cigarettes have glass fibres withintheir filters. These fibres, he told ABC News, were ‘invariably’ inhaled or ingested when smokerstook a drag from an Eclipse.However, despite this massive outcry from health authorities, including the US Surgeon General, thereal reason Eclipse failed to ignite the market was because consumers still felt absolutely no desirefor a smokeless cigarette.Lessons from smokeless cigarettesDon’t baffle consumers with research. RJ Reynolds spent a great deal of money researching thehealth aspects of its two brands of smokeless cigarettes. However, this only resulted in mixedmessages. Although RJ Reynolds’ research concluded that in many ways the brands were safer, theycouldn’t be considered entirely safe. ‘As we all know, no cigarette is safe,’ admitted RJ Reynolds’CEO Andrew J Schindler. Furthermore, RJ Reynolds’ research prompted opposition from otherhealth authorities who published their own independent findings. Rather than end up looking as if itwas acting in the public’s health interests, the tobacco firm only ended up looking manipulative.Don’t sell ice cubes to cocker spaniels. Smokeless cigarettes appealed to people who didn’t like thesmell of smoke. These people are called non-smokers, and generally tend not to buy cigarettes.Robert McMath in Business 2.0 likened this approach to ‘trying to sell ice cubes to cocker spaniels,’and asked the seemingly obvious question: ‘Why create a product for a consumer who wants nothingto do with you?’Realize that if it has failed once, it will fail again. RJ Reynolds should have abandoned the wholeidea once the Premier cigarette failed.